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I'm quite sure that things will begin to go south well before the Jan. 15th deadline. The debt ceiling debate, and a possible government shutdown is, at least to me, the most untoward economic happening that I can recall...

Obamacare may be the driving force behind a concerted effort to keep the government shut down without a continuing resolution of some kind. Not raising the debt ceiling at that time will also cause economic chaos within the world's stock and bond markets.

NOTE: Washington only has about 5 working days to work all these problems out. Between Thanksgiving vacation, and the coming Christmas vacation, congress won't be in Washington very much.

NOTE2: There are forces within the Washington establishment that wish to bring down the current system of government. The timing of the debt ceiling debate, and Obamacare, would be the perfect time for them to make a move.

Jim Rogers Cautions "Be Prepared, Be Worried, And Be Careful... This Is Going To End Badly"

http://www.zerohedge.com
"Eventually, the whole world is going to collapse. We in the West have staggering debts. This is going to end badly. We are all floating around on a sea of artificial liquidity right now. This is not going to last.

It's only human nature to want to know who, what, when, and where (first).

Yes, there are forces within DC that would absolutely love to bring down the current system of government and so far (IMHO) they're doing a pretty good job.

Also, I severely doubt there will be ANY warning....surprise is the best element of attack. And attack is what we've been under for, oh, say, the last 5 years. Looks as if we're about to get the "surge" attack any time now.

It's only human nature to want to know who, what, when, and where (first).

Yes, there are forces within DC that would absolutely love to bring down the current system of government and so far (IMHO) they're doing a pretty good job.

Also, I severely doubt there will be ANY warning....surprise is the best element of attack. And attack is what we've been under for, oh, say, the last 5 years. Looks as if we're about to get the "surge" attack any time now.

Yep, you definitely could be right.

" what will the Federal Reserve do if we were to breach the debt ceiling, instead of raising the debt ceiling? First and foremost, the Congress cannot issue any new debt. The Federal Reserve can still buy maturing debt that is outstanding though. At this moment the Federal Reserve owns some 32% of the total outstanding bonds, so it can still buy the bonds that nobody wants. The only problem is that the Treasury Department can't increase the supply of bonds that are outstanding. There is therefore only one thing to do, printing more money and increasing the amount of QE instead of tapering. In fact, there will be no chance of tapering as I already wrote here. The Federal Reserve will buy up all defaulting debt/bonds and all the defaulting interest payments that come with it. There is no way that foreigners won't be paid as this will undermine the U.S. dollar as reserve currency.

Also remember that the Federal Reserve mostly holds Treasuries with long-term maturity (+5 years) and is monetizing 90% of this debt. If the default comes, it will have to come to the rescue for the shorter-term maturing bonds too, which are mostly held by foreigners. To keep yields low, the Federal Reserve would have to increase QE to buy these defaulting bonds.

All in all, the end result is a declining U.S. dollar. We already note that the U.S. dollar index has gone below 80 and I expect that to continue declining due to the debt impasse (Chart 2). A declining dollar index is a very good indicator for rising U.S. Treasury yields and rising current account deficits to come."

The Treasury Department emerged from the fiscal fight in Congress with tools intact that will allow the U.S. to stay under the debt limit for a month or more after the ceiling is reinstated Feb. 7, budget analysts said.

President Barack Obama signed legislation today that reopened the government and allows the Treasury to sell bills, notes and bonds without exceeding the borrowing cap, which was $16.7 trillion before the new law suspended it until Feb. 7. After that, the department can avoid a breach by using accounting maneuvers, which some analysts say can provide about $200 billion to help fund operations until income-tax revenue arrives before the mid-April filing deadline.

“There is a 25 percent chance that the Treasury might be able to reach April 15 without a debt-ceiling increase,” Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey, wrote in a research report dated today. “If so, April tax receipts would push the debt-ceiling deadline into the latter part of the second quarter.”

The extra time may mean the next debt-limit showdown flares up closer to 2014 mid-term congressional elections, becoming an issue in primaries including the one between Senate Minority Leader Mitch McConnell, a Republican from Kentucky, and Tea Party candidate Matt Bevin, said Chris Krueger, a Washington analyst for Guggenheim Securities LLC.

All members of the 435-seat House and a third of the 100-seat Senate are up for reelection in November 2014.

‘Toxic’ Vote
“There is no more toxic political vote than one to raise the debt ceiling,” particularly in Republican primaries, Krueger said. “Many Republican House and Senate members will be looking over their right shoulder in fear of retribution for another vote to raise the debt ceiling just before their primary elections.”

The Treasury’s so-called extraordinary measures, which include suspending sales of non-marketable state and local government securities, have become ordinary over the past two decades.

Administrations of both parties have used them to keep paying bills while Congress weighed debt-ceiling increases. House Republicans tried and failed to stop their use during the next fiscal battle, running into opposition from the Obama administration.

Treasury spokeswoman Brandi Hoffine declined to comment.

The exact amount of money freed up by the extraordinary measures depends on the time of year they are employed, according to Alec Phillips, an economist in the Washington office of Goldman Sachs Group Inc.

Extra Time
“In early 2013, the Treasury had around $200 billion in extraordinary measures and we assume they will have about the same in early 2014,” Phillips said in a note yesterday. In 2012, it took about five weeks starting from Feb. 7 for the debt subject to the limit to increase by $200 billion, and this year it took about four weeks from the same starting period, he said.

An extra dividend from the McLean, Virginia-based Freddie Mac might help the Treasury get beyond that period, Phillips said. The U.S.-owned mortgage financier, which has operated under federal conservatorship since it was seized in 2008, is sending the Treasury dividend payments as a condition of the rescue.

Besides suspending the state and local government securities, known as “slugs,” Treasury can also declare a “debt issuance suspension period,” which allows it to hold off investment of new amounts and redeem some existing Treasury securities in the Civil Service Retirement and Disability Fund.
That measure, and the suspension of daily reinvestment of Treasury securities held by the Government Securities Investment Fund of the Federal Employees’ Retirement System Thrift Savings Plan, were used in at least seven debt-limit impasses since 1995.

Earlier this week, Fitch Ratings put the U.S. AAA credit grade on ratings watch negative, citing the government’s inability to raise the debt ceiling in a timely manner.

The wonder of our time isn’t how angry we are at politics and politicians; it’s how little we’ve done about it. - Fran Porretto
-http://bastionofliberty.blogspot.com/2016/10/a-wholly-rational-hatred.html

It's a financial perfect storm. Everything is poised like a row of dominoes and if one tilts, they will all go in short order.

The wonder of our time isn’t how angry we are at politics and politicians; it’s how little we’ve done about it. - Fran Porretto
-http://bastionofliberty.blogspot.com/2016/10/a-wholly-rational-hatred.html

It's a financial perfect storm. Everything is poised like a row of dominoes and if one tilts, they will all go in short order.

Yep......

here's the info on the debt ceiling that you posted,

"The final bill will fund the government through Jan. 15, and raise the debt cap through Feb. 7. Plus it provides back-pay for furloughed workers.

The plan does not include any provision relating to the ObamaCare medical device tax or other unpopular parts of the law, as prior plans did; instead it would include a single provision meant to verify the income of those receiving ObamaCare subsidies. It would also instruct a bipartisan budget committee to report back on a broader plan by mid-December.

Lawmakers on both sides acknowledged the deal was far from perfect, and once again pushes off difficult and long-term decisions about the country's fiscal health for another day.

"This deal is yet another promise to work on the problem tomorrow," Sen. Mike Enzi, R-Wyo., said in a statement.

Sen. Joe Manchin, D-W.Va., who helped draft the bill, told Fox News he's "ashamed" at how Washington has acted, but also held out hope that lawmakers can "work it out" and strike a broader agreement.

The bill tees up another confrontation weeks down the road if the two sides are unable to do that. But, for the near-term, it would lift the partial shutdown that began on Oct. 1 and remove the threat of missing the debt-ceiling deadline on Thursday.

Obama, perhaps emboldened, fired off a simple “no” when asked in the White House briefing room whether this would all play out again in a few months.

In the end, Obama mostly got what he wanted out of the package, with a relatively clean funding bill and debt-cap increase, albeit a shorter-term one than Democrats wanted.

The problems as I see them not only are financial. Obamacare may be considered a 'white elephant' by many, and the costs of implementing it are huge. Therefore, adding the trillions of dollars that would be needed to get Obamacare off of the ground, will send us over the fiscal edge in short order, IMHO.

The old analogy...between a rock and a hard place comes to mind as I type.

We are moving from crisis to crisis....with absolutely no solutions in sight. Will TPTB pull out a 'game changer' from their magic bag of tricks?

John Rubino: “We’ll Get A Crash That’s Commensurate With The Size Of This Bubble”
December 4, 2013 | By Tekoa Da Silva

I had the chance recently to reconnect with John Rubino, CFA Institute contributor, blog publisher, and author of a number of financial books.

It was a particularly interesting conversation, as John has written a number of prophetic books warning of growing asset bubbles, and currently produces editorial research for CFA designated fund managers worldwide. As the subject of discussion, was a recent piece published by John, entitled, “Inflation is Raging – If You Know Where to Look“.

In discussing his research on global markets, John notes that frightening asset bubbles are developing all over the world, and as a case in point, “Bitcoin…was about a dollar per Bitcoin a couple of years ago. Now it’s $1000…A painting by Francis Bacon called ‘Three Studies of Lucian Freud’ [just] sold for $142 million, which was the highest price ever paid for a painting at an auction….[A] diamond [just] sold for $83 million which is the highest price ever paid at auction for a diamond, and trophy real estate in Manhattan, London, Singapore and Hong Kong have all blown through previous records…So there are asset bubbles [occurring] all over the world.”

There is one final hard asset group which has yet to move into euphoric pricing John noted, and, “If you drew up a chart of all the hard asset investment options for the average member of the 1%…they would look at that chart and say, ‘OK, well my penthouse has doubled. My paintings are way up. My jewelry is way up. Well, look at gold and silver. It’s actually down. Let’s move some money in that direction. That’s the last good deal that’s out there on the list of things that are not fiat currency.’”

The fact that precious metals have yet to move into a bubble-phase according to John, “Implies that gold and silver are being really aggressively manipulated at this point and the reasoning for that makes complete sense—the central banks of the world need to depress gold and silver because those are forms of money which compete with the dollar and the euro in the end. When they go up, they make those currencies look bad.”

As a consequence of the ‘monetary truth-telling’ aspect of gold, “The central banks of the world…as part of the process of greatly expanding government debt, and financing that debt with newly created currency…have to use some of that currency to push down the value of gold and silver and they’re doing it,” John added, “So at some point in the not too distant future, this game has to end and when it does…the market [will] decide where gold and silver should be…[and] they will just snap right back into [price] alignment with art and jewels and high end real estate…or we’ll see a [supply] default on one of the major metals exchanges…”

As a final comment to investors, John noted that if confidence, “[Is] shaken in one major currency, it will be shaken in all of them…Once [the people] figure it out the game is over…[and we'll] have to go back to some form of sound money. That’s really the end result of all of this—is that we will go back to gold and silver…something that cannot be inflated away [and] cannot be created in infinite quantities by central banks.”
—

This was a powerful interview, conducted with an author and researcher who’s work is mainly reserved exclusively for asset managers worldwide. It is required listening for serious investors and market students.

To listen to the interview, left click the following link and/or right click and “save target as” or “save link as” to your desktop:
>>Interview with John Rubino (MP3)

The wonder of our time isn’t how angry we are at politics and politicians; it’s how little we’ve done about it. - Fran Porretto
-http://bastionofliberty.blogspot.com/2016/10/a-wholly-rational-hatred.html

Despite a modest beat at the headline Factory Orders (-0.9% vs -1.0% expectation), this is still the largest drop in orders since July following a revision upward for last month.

*U.S. OCT. DURABLES ORDERS DROP 1.6%; NON-DURABLES FALL 0.2%

Non-defense capital goods saw a 3.4% plunge (SA) - also the largest drop since July and defense capital goods orders tumbled 15.8% (from a 19.1% rise last month). The volatility and broken seasonality (due to the government shutdown) makes this series extremely noisy but overall, despite the modest beat, the trend is down notably.

The petrodollar system is one of the most important indicators to watch in order to gauge the timing of the collapse of the US dollar.

In case you missed it, I previously discussed this crucial topic with Ron Paul (see here and here).

This is naturally relevant to those considering diversifying their political risk through internationalization—what this site is all about.

Once the dollar loses its status as the world's premier currency, I believe your options to take preventative action will have significantly narrowed, if not disappeared altogether.

Hence the premium on taking action before that happens.

In order to better understand all of this and get a better idea of where we are right now and where we are headed, I got in touch with Jim Rickards.

im Rickards, as many of you know, is a best-selling author and an expert on the international monetary system and geopolitics.

I'm hard-pressed to think of anyone more qualified than him to comment on this critically important topic and am glad to bring this interview exclusively to International Man readers.

You won't want to miss this fascinating discussion, and you'll find it below.

Until next time,

Nick Giambruno: Jim, can you give us a summary of the health of the petrodollar in the past, what it looks like now, and what you think it will look like going forward? What is the significance of all this for the dollar's role as the world's premier reserve currency, the international monetary system in general, and the nominal price of gold?

Jim Rickards: The term "petrodollar" is shorthand for an understanding between Saudi Arabia and the United States that the US will guarantee the security of the House of Saud in return for the Saudis agreeing to price oil in dollars, to manage the dollar price of oil, and to redeposit those dollars in the banking system where they can be used to support international lending by major banks.

This lending, in turn, supports purchases of US and Western manufactured goods and agricultural exports by developing economies. From this deal, the US got cheap energy, exports, banking profits, and the ability to operate a fiat currency system. The Saudis got rich and survived. This system has existed implicitly since 1945 and explicitly since 1974 when it was negotiated by Henry Kissinger on behalf of the Nixon administration.

Now the petrodollar system is collapsing for two reasons. The US has abused its privileged reserve currency position by printing trillions of dollars in an effort to create inflation. More recently, President Obama has taken steps to anoint Iran as the regional hegemon of the Middle East, and to ease the way, in stages, toward Iran's possession of nuclear weapons capability. This is viewed as a stab-in-the-back by the Saudis and the Israelis and will lead quickly to Saudi Arabia obtaining nuclear weapons from Pakistan.

There is also a newly emerging alliance among Saudi Arabia, Israel, Egypt, and Russia. The new alignment will have no particular use for US dollars and no reason to support them. This turn of events marks the beginning of a significant diminution in the role of the dollar in the international monetary system. Since the price of gold is, in large part, simply the inverse of the value of a dollar, the decline of the dollar will presage a major increase in the dollar price of gold.

Nick Giambruno: Saudi Arabia is the lynchpin of the petrodollar system, and they feel the US is not holding up its end of the deal, i.e., keeping the region safe for the monarchy. It also appears that the Saudi regime is not militarily self-sufficient and needs an external protector of sort. That said, what actions can the Saudis realistically take to diversify away from the US, and what initial steps would signal they are not bluffing?

Jim Rickards: When the US withdraws from the rest of the world, as it has been doing since 2009, the world does not sit still but instead seeks regional alliances and other alignments to protect their respective security interests. With the US moving closer to Iran and away from Saudi Arabia, it can be expected that Saudi Arabia will react by creating new alliances. It will receive nuclear weapons from Pakistan, conventional weapons from Russia, intelligence cooperation from Israel, and troop strength, if needed, from Egypt. This is basically an alignment of powers that are all disaffected by the recent US tilt toward Iran.

Saudi Arabia will also expand it energy exports to China. Russia and China are two major powers who have expressed dissatisfaction with the dollar system in the recent past. With Saudi Arabia now aligning more closely with Russia and China, the pieces are in place to diminish the role of the dollar and replace it with either a system of regional reserve currencies or a new global currency based on the Special Drawing Right issued by the IMF. These developments will not be completed overnight, but they have begun and will assume greater prominence and visibility in the next several years.

Nick Giambruno: In gauging the sustainability of the petrodollar system, what other factors should we keep a lookout for: alternative economic/monetary/security arrangements from the BRICS countries, a GCC central bank, and the possibility of a yuan denominated oil futures contract on the Shanghai Futures Exchange?

Jim Rickards: All of the developments you mention, a GCC central bank, a BRICS multilateral bank, and the increasing use of the yuan are significant straws in the wind all pointing in the same direction—the decline of the dollar as the global reserve currency. Other similar developments could include a regional ruble zone on the Russian periphery and the creation of a true Eurobond backed by the full faith and credit of all members of the European Monetary System. While no one of these developments is decisive, each one of them represents an alternative to the dollar for a specified set of transactions. Cumulatively these developments could push the dollar past a tipping point, where it collapses suddenly and unexpectedly after an initially slow decline.

Nick Giambruno: Do you think the US has any aces up its sleeve or will otherwise be able to somehow pull a rabbit out of a hat and prevent the diminution of the dollar's role in the international monetary system?

Jim Rickards: There is a set of policy choices the US could make that would preserve and even strengthen the dollar's role as the leading global reserve currency. These include lower taxes, higher interest rates, breaking up big banks, reduced regulation, repeal of Dodd-Frank, reinstatement of Glass-Steagall, banning most derivatives transactions, improved educational outcomes, smart investment in infrastructure, reduced entitlements, and other structural adjustments. I see little prospect of any of these things happening, let alone all of them. As a result, one must conclude that the dollar is heading for collapse even thought that outcome is not inevitable. It is not too late to make structural adjustments, but it is extremely unlikely.

Nick Giambruno: Jim Rickards, thank for your time and insight into this critical issue. I'd like to encourage our readers to check out your upcoming book, The Death of Money: The Coming Collapse of the International Monetary System, which will no doubt be an international hit. I have already pre-ordered it, and our readers can do the same here.

"Give me control of a nation's money and I care not who makes her laws."
Mayer Amschel Rothschild

If we look closely at Greece, we can clearly see the path in which we're headed......and in my opinion, we could eventually be much worse off then Greece, since in essence, we have so many other 'cultures' dwelling within CONUS.

On the heels of some wild trading in the gold and silver markets, today legendary Pierre Lassonde warned King World News about a “seminal event” that can radically change the gold price “overnight.” Lassonde also told KWN what to expect in the gold market going forward, as well as the mining shares. Lassonde is arguably the greatest company builder in the history of the mining sector. He is past President of Newmont Mining, past Chairman of the World Gold Council and current Chairman of Franco Nevada.

Lassonde is one of the wealthiest, most respected individuals in the gold world, and as always King World News would like to thank him for sharing his wisdom with our global readers during this critical period in these markets.

December 4, 2013

Lassonde: “What could precipitate a major sentiment change in the gold market and a significant revaluation of gold is if we were to see a default in Europe, whether it’s Greece, Spain, or another EU member. I think you will see defaults....

“I don’t believe that Greece will ever be able to repay its debt. I don’t believe that Portugal or Italy will be able to repay their debts, and France is on the same path.

So when we have a major catastrophe in Europe, all of the sudden you will have one of those seminal events where people say, ‘We are going to see a euro breakup, I would rather own gold.’ We could see that situation literally take place overnight.

The reason I am saying this is investors can try to be ‘cute’ and think, ‘The bottom is going to be next year, so I’m not going to get into gold yet. But by investors trying to bottom-fish, they can miss the whole upside move in gold really easily because you don’t know when these disasters are going to happen.

When I look at the gold price today, and I see you could have $75 on the downside, and possibly a $1,000 upside, well, I would tell people you don’t play for the last dollar. You better be invested here rather than on the sidelines, that’s my view.”

Lassonde added: “In terms of the gold shares I have never seen them so cheap. The industry is going through a massive rationalization as we speak. Companies are pruning the waste and greatly increasing their efficiencies. I strongly believe that in 2014 you are going to see surprisingly strong results. So when I see Barrick Gold trading below US $16, and New Gold trading below US $5, I never thought we would see these kinds of equity prices.

I believe the current prices for high quality mining shares are a gift and this is the kind of thing you see toward year-end as a lot of portfolio managers are jettisoning these underperforming stocks and it is creating incredible opportunity in this space. These prices are a Christmas gift given to the people who are going to buy these high quality companies at these prices.”

"Give me control of a nation's money and I care not who makes her laws."
Mayer Amschel Rothschild

Heck Doc, I figured that the whole thing was going to implode last January... the extra year was great!

Actually, it imploded in 2008. All the world's financial stats and actions are now run by computers using HFT (high frequency trading). The program is probably complicated, and takes into consideration the amount of money flooding into the markets from governmental sources................among other things. Our very lives are now ruled by complicated technologies.
If all these technologies were to suddenly disappear, what then? I dare not answer my own question.

Be informed (a prolific poster from another forum says this

Back in 1929 there was 2 billion people on Earth, now there is 7+ billion all competing for the resources that have become much less.

Back in 1929 there was still an excellent base of farms and food production that was natural, none of this GMO crap, and much more to go around.

Back in 1929 you did not have Fukushima, Deepwater Horizon, and the countless other man made toxins dumped into our food supplies.

Basck in 1929 humans did not have the A-bomb and H-bombs in mass that can level human civilization in a moment’s notice when one of these assholes decides to push the nuclear button, football, or whatever launches the missiles.

Does not the Washington establishment recognize that they ARE NOW the current system of government?

The Washington establishment is not monolithic. There are three or more factions that are constantly vying for control. The factions, as I've heard by rumor, are militaristic(I've heard there are three sub-groups within this group), communistic, and players from other countries. These factions are constantly gaining and losing members as time passes. I'm not counting spies, 5th columnists, fellow travelers, and pseudo lobbying groups that wish to sway our policies one way or another and who have foreign sponsors. That group has hidden under the radar for many a year.

NOTE: Most of the work is done in seedy(smokeless) back rooms. The public never gets to see how the sausage is made.

1967–some things never change.
There’s something happening here
What it is ain’t exactly clear
There’s a man with a gun over there
Telling me I got to beware

There’s battle lines being drawn
Nobody’s right if everybody’s wrong
Young people speaking their minds
Getting so much resistance from behind

What a field-day for the heat
A thousand people in the street
Singing songs and carrying signs
Mostly say, hooray for our side

Paranoia strikes deep
Into your life it will creep
It starts when you’re always afraid
You step out of line, the man come and take you away

They attempt to push back the day of reckoning but they are pushing on a string now. The last go round was such a debacle to the world that I can't wait to see the next time. If there is any doubt that Washington is completely dysfunctional the next few months should remove all doubt. Have they done anything since they kicked the can down the road to try to get a handle on both the budgetary process as well as the debt? Doubt it. And if they are not desperately pushing to get the house in order then why not? The conspiratorial side of me muses that they know the game is up [at least the few intelligent ones] and that moving the deck chairs around on the USS Titanic is a waste of time.

What is the lake of fire? What is it's purpose? Is the lake of fire eternal hell? Is there any hope of escape for those cast into this lake?http://bible-truths.com/lake1.html

Does not the Washington establishment recognize that they ARE NOW the current system of government?

I may be wrong but perhaps the "Washington establishment" actually wants to bring down the FORMER system of government, meaning the vestiges of it's foundations; U.S. Constitution, all illusions of checks and balances and congressional control of spending.

It may be a matter of the messenger not clearly communicating the reality. Of course, it could be my bad - it's not impossible that the Republican establishment is fixing to throw in the towel and to break with TP, conservative and libertarian allies to join the 'progressive' majority that has been in control for more than the five years of O's tenure.

Heck Doc, I figured that the whole thing was going to implode last January... the extra year was great!

Closer to my thinking right now. We have been down this greasy, hyped up ramp before. After many loud words, threats and dubious deals, the White House always wins and the public is left holding a nothingburger.

I do not pretend to know how it will play out. Another chapter of "the same old song and dance" appears likely from the info posted here.

.................................................. ...............
Australia just scrapped its debt ceiling. America should, too.
Mature countries just walk away from a fight
By John Aziz | December 4, 2013

ebt ceiling fights, it seems, have become a permanent fixture in American politics. Twice in the last couple of years, the United States has been days away from potentially irrevocable economic damage because Congress refused to raise the debt ceiling and let the Treasury issue more debt. The next debt ceiling fight is slated for March 2014.

But isn't there a better way to increase a borrowing limit — and one that doesn't freak out markets, investors, and, well, just about everyone every few months?

Australia has an answer: It decided to get rid of its debt ceiling altogether:

The federal government will be able to borrow as much money as it wants after Federal Treasurer Joe Hockey cut a deal with the Greens to dispense with the debt ceiling completely...

It means the government will not have to ask the Parliament for permission whenever it wants to borrow money above a certain limit. [Sydney Morning Herald]

Some may be extremely concerned by this possibility. If the government can borrow all the money it wants, then won't that lead to the government making extremely irresponsible decisions, such as spending huge amounts of money it doesn't have building bridges to nowhere?

But it's actually a brilliant idea — and one that America and the rest of the world would do well to implement as soon as possible — because it would eliminate the uncertainty and confusion of debt ceiling fights. And there is no reason — absolutely no reason — to believe that it will lead to excessive government spending. Why? Because there already exists a natural debt ceiling called interest rates — the cost at which investors in the market will lend the government money.

The U.S. government is legally bound to pay its debts, and as the issuer of currency it has the means to do so. This means that U.S. government debt is considered by the market to be a very safe asset. And, as Frances Coppola argues, that means that it is a critically important part of the global financial system, because it is used around the world as collateral for lending and as a store of purchasing power. Right now interest rates are very low by historical standards, even after adjusting for inflation. This means that the government is not producing sufficient debt to satisfy the market demand. The main reason for that is the debt ceiling.

If the Treasury became extremely profligate and started borrowing much, much more — say, increasing borrowing from just over half a trillion dollars a year to ten trillion dollars a year — interest rates would rise significantly, making it unaffordable for the government to do so. That is the only debt ceiling we need.

The debt ceiling today is particularly badly designed. Why? Because it's denominated in an arbitrary number of dollars. Let's say you are a government with $1,000 of debt. Can you repay it? It depends what your tax base is. If the whole economy is generating $10 of activity per year, you have no chance. At a 30 percent tax rate, that would yield just $3 per year in tax. But let's say you have a $10,000 economy. Then, a 30 percent tax rate yields $3,000, meaning that $1,000 of debt would be easy to repay. So the sustainability of your debt is dependent on the size of the economy, and the size of your debt is much more meaningful if it is expressed in terms of the amount of activity taking place in the economy (GDP).

So should the current debt ceiling be replaced by a ceiling expressed as a percentage of GDP? While that is slightly less stupid than the current system, it is still not the best idea because it would be very hard to agree on what constitutes a sustainable level of debt. For example, Harvard economists Ken Rogoff and Carmen Reinhart published a well-received paper suggesting that 90 percent of GDP was the level at which government debt becomes damaging to economic growth. But their 90 percent limit has been completely debunked since. Great Britain, for example, had a debt over 250 percent of GDP in the 19th century, and successfully paid it down without defaulting.

Essentially, then, the only sensible way to determine how much the government can borrow is whether or not people are willing to lend the government more money. Australia has made a very smart move, and the U.S. should follow suit as soon as possible.

This PM price suppression is like holding a beach ball under water. The further down you push it the higher it shoots out of the water when you can't push it down anymore. A panic to get out of fiat into hard currencies and commodities is coming. The more they push down the paper price the more violent reaction to the upside. That is why I'm not getting all hot and bothered by the suppression. Payday is coming. I can wait. In the meantime I accumulate as I can.

What is the lake of fire? What is it's purpose? Is the lake of fire eternal hell? Is there any hope of escape for those cast into this lake?http://bible-truths.com/lake1.html

" what will the Federal Reserve do if we were to breach the debt ceiling, instead of raising the debt ceiling? First and foremost, the Congress cannot issue any new debt. The Federal Reserve can still buy maturing debt that is outstanding though. At this moment the Federal Reserve owns some 32% of the total outstanding bonds, so it can still buy the bonds that nobody wants. The only problem is that the Treasury Department can't increase the supply of bonds that are outstanding. There is therefore only one thing to do, printing more money and increasing the amount of QE instead of tapering. In fact, there will be no chance of tapering as I already wrote here. The Federal Reserve will buy up all defaulting debt/bonds and all the defaulting interest payments that come with it. There is no way that foreigners won't be paid as this will undermine the U.S. dollar as reserve currency.

Also remember that the Federal Reserve mostly holds Treasuries with long-term maturity (+5 years) and is monetizing 90% of this debt. If the default comes, it will have to come to the rescue for the shorter-term maturing bonds too, which are mostly held by foreigners. To keep yields low, the Federal Reserve would have to increase QE to buy these defaulting bonds.

All in all, the end result is a declining U.S. dollar. We already note that the U.S. dollar index has gone below 80 and I expect that to continue declining due to the debt impasse (Chart 2). A declining dollar index is a very good indicator for rising U.S. Treasury yields and rising current account deficits to come."

This quote came from Seeking Alpha...

Actually - even worse than long-term treasuries. Since embarking on QE infinity, they've been bulking up on motgage-backed securities (MBS). In other words, pure crap. This will make it next to impossible for them to unwind these positions! :-(

A word to the wise ain't necessary - it's the stupid ones that need the advice.

The conspiratorial side of me muses that they know the game is up [at least the few intelligent ones] and that moving the deck chairs around on the USS Titanic is a waste of time.

I'm sure they all know that. But they refuse to do the right thing, that is if there is any way out of this other than through collapse. And the Cloward Piven followers probably are having a sneaking suspicion that the collapse won't drive everyone into their communist embrace, and all those firearms and ammunition that 0bastard help sell will be a big sticking point in the onward march of the socialist/communist utopia.

I may be wrong but perhaps the "Washington establishment" actually wants to bring down the FORMER system of government, meaning the vestiges of it's foundations; U.S. Constitution, all illusions of checks and balances and congressional control of spending.

It may be a matter of the messenger not clearly communicating the reality. Of course, it could be my bad - it's not impossible that the Republican establishment is fixing to throw in the towel and to break with TP, conservative and libertarian allies to join the 'progressive' majority that has been in control for more than the five years of O's tenure.

I have no doubt that this was the goal all along of 0bastard and the people who pushed him up there.

congress gets together, breaks into groups. Anyone who isn't in the know is in a group with at least one 'in the know' The ones that aren't in the know, are juniors who pretty much haven't done anything since they've been there.. nothings been done in years... since obamacare.. dont get me started!!..

So, the all get 'knowed up' come out, and UNANIMOUSLY and with the kind of BIPARTISANSHIP not seen in years, SMILING, HANDSHAKING, PATTING BACKS.. it will be awesome how unanimously they agree...

Not to do the lawful thing, oh no, not to do the honest thing, not to do the ballzy thing and shut this b*tch down (.fed govt..),

Not to do the "whatch how smooth we are" and just suspend the debt cieling, which australia can get away with, they are not petro dollar/world reserve currency... all the big players (banks & china & foreign govts) would GET PANICKY.. not want to be the last out the gate or the last standing.. start dumping stuff and cause a world choas...

No, our gutless wonders will no doubt pass a continueing resolution.. maybe only 6 months for the first one, (test the waters.. and not go TOO big if things are toooo on edge..) maybe a year.... but henceforthe the US will have no debt limit... QEInfinity can compete unencumbered.. and WALLA... OBAMA CARE RIDES...!!

fast forward to February 2014 (a nary 2 months away) and with this third scenario change will begin with govt and banks slowing down reliance and divesting and basically seeing this as the US govts last chance to let the banks rape and fleece the sheeps before utter and total choas within the US... I think the whole world is heading somewhere harsh, but when the americans find out their US dollars are not worth ANYTHING and there is no food.. even putting .govt back together may be hard... I think it will be a GOOD idea to leave the country... however, walking is probably going to be the best and worst option!

I think they'll 'suspend' the limit for some amount of time. (We currently are, an so far, so good...) and any days without warfare we get until the days with stateside warfare, well, those be miracles, God has begotten us.

If I was born in Kenya, I'd be President by now.

*My fingers are slysdexic. Damn.*
They're, there, their. There. I know the difference. My mind is miles and miles of thought ahead of my fingers and my fingers are peons. peons do sh!tty work.:D

this commentary from Mike Slavo.....he's an internet journalist.
Where We're Headed

First the threat of deflation (1), followed by a helicopter drop (2), followed by big reflation (3), followed by a real deflation (4), and then followed by hyperinflation (5),

In 2008 we saw asset valuations from stocks to commodities lose significant value. It was a deflationary impact so threatening that the U.S. government was on the brink of a collapse which sunsequently led to members of Congress being warned that if nothing was done there would be tanks on the streets of America. This was followed by an unprecedented bailout package, which included an astronomical infusion of cash by the Federal Reserve under the direction of Chairman Ben Bernanke. Since then we’ve seen a massive reflation in a system where the economic fundamentals have only gotten worse – stock markets have hit all time highs, home prices have seemingly re-stabilized and personal debt is approaching 2007 levels.

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